UK 4G spectrum auction starts today, with online bidding... like eBay

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Independent UK communications regulator Ofcom has announced that bidding for the available 4G spectrum in the country has now started.

Seven bidders, including Everything Everywhere (EE - which encompasses T-Mobile and Orange), Vodafone, Three, O2, BT, B2B network services firm MLL Telecom, and the UK arm of Hong Kong network provider PCCW, HKT, are all in the mix, and the bidding process will be conducted online like a high-level eBay. Sort of.

Bidding will take place over several rounds, with bids to be placed online over secured connections, using proprietary software. It will take a "number of weeks" until the final results are determined.

The bidders are competing for 28 lots of spectrum in two separate bands - 800MHz and 2.6GHz. The higher of the two offers the most capacity and is essential for securing faster speeds, while the 800MHz bandwidth is the one freed up when the UK's TV service went completely digital.

Ofcom has also revealed how its "combinatorial clock" auction process works. "The auction proceeds through a number of rounds," it says. "At the start of each round Ofcom announces a price for each lot and each bidder then specifies what combination of lots they would most like to win at those prices.

"In each subsequent round Ofcom increases the prices for lots that have excess demand, until eventually demand matches supply. At this point the clock stage ends."

There is then a supplementary round of bidding to ensure that all spectrum lots have been attached to combinations bid for and, therefore, that no spectrum is left.

Ofcom then decides how much each bidder should pay for their winning bids. "Having identified the winning combination of bids, Ofcom will then work out how much each winning bidder should pay using a so-called ‘second price rule’," it reveals.

"Each winning bidder will pay the smallest amount that they would have needed to bid in order to win – as on auction website eBay."

Finally, Ofcom decides on who is designated which frequencies.

It is expected that the first 4G services to make use of the two new spectrum bands will be launched around summer time. Naturally, EE already offers 4G services on its existing 1.8GHz band, which it launched in October last year. It has recently announced new price plans for 4G mobile data, including one that offers a whopping 20GB a month.